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FCC issues rules for local phone competition

Posted on: Thursday, 21 August 2003, 06:00 CDT

WASHINGTON (AP) -- The Federal Communications Commission issued long-awaited rules for telephone and Internet competition Thursday, giving states more authority to determine which phone companies operate within their borders but allowing the former Bell companies to keep Internet rivals off their high-speed lines.

The rules are the result of fractious FCC votes in February. Chairman Michael Powell was on the losing end of the vote on phone competition, the first time he has been in the minority since taking over the five-member panel in 2001.

A key concern is the right of competitors to lease parts of the Bell networks, such as lines and central office switching capabilities, at wholesale rates. To foster competition in residential service, companies such as AT&T and MCI enjoy low lease prices set by friendly state regulators.

In the face of evidence that competitors could provide their own switching -- the mechanism that routes a call from a house to the network -- Powell wanted to phase out these discount leases in nine months. But the final order from the FCC hands the decision about when to discount switching leases to the states, and then gives companies three years after a competitive market is established to provide its own switching.

A market is deemed competitive when either three competitors provide their own equipment or two wholesalers sell the service. At that point, states can stop requiring that the Bells lease their switches at wholesale rates.

The FCC allowed the states to set the boundaries of each market, except a whole state cannot be one market.

The FCC order also requires the Bell companies lease their copper lines for high-speed DSL service. Once the Bell companies upgrade their lines, installing fiber optic or mixed fiber-copper lines, they no longer need to make those lines available to other Internet companies.

An official at Verizon, one of the Bell companies, said he would need time to digest the 576-page FCC order.

``The world is changing so fast, it may already be outdated,'' said Tom Tauke, a former congressman who is now Verizon's senior vice president for public policy and external affairs. ``Every day, it becomes more and more apparent there's a whole new world of communications around us that connects people in ways that weren't even imagined just a few years ago.''

At AT&T, which has entered the local phone market to compete against Verizon and the other Bells, Federal Regulatory Affairs Vice President Robert Quinn welcomed the FCC rules for local service, saying they ``will allow AT&T to continue to serve our existing local customers and to follow through with our plans to expand to other markets.''

But Quinn criticized the rules for broadband.

``It simply surrenders to the wishes of the incumbent telephone monopolies and grants far-reaching and premature deregulation,'' he said. ``Consumers will pay for this lack of FCC resolve in the form of higher rates, less choice and lower quality services.''

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On the Net:

FCC: http://www.fcc.gov

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